EP 32 - Revenue and Net Profit: What's the Difference?
In today's episode I will give you a better understanding of the difference between Revenue, Net Profit and Gross Profit. Having an understanding of each of these will help you to make better decisions in your business. Revenue: Total Sales! (Top Line) Simple as that, whatever you sell goes directly in to the revenue category. Gross Profit: Revenue - Cost of Goods Sold = Gross Profit. Let's get a better understanding of cost of goods sold (COGS) first. COGS would be any costs that is directly associated with production of the product you are selling. You could also include labor directly associated with that product. For example, if you are in the business of making masks. You would need fabric, elastic and thread to complete the production of your masks. Those three items would be your COGS. Net Profit: Revenue - ALL Expenses = Net Profit/Loss (Bottom Line) Net profit is what you have actually made or lost in your business. Not only would you deduct the COGS from your revenue total but you would also include any other business expense. Business expenses not included in COGS might include internet, phone, utilities, rent, continuing education, business licenses, etc. All items of the profit and loss statement are important and will help you as you make future goals and decisions in your business. Make sure you are paying attention to it all to see if there is anything that you should change or adjust in your entrepreneurial venture! Come back Thursday to learn more but in the mean time …. Join the e-mail list here https://bit.ly/BizBasicsBootcamp to be the first to know when the Business & Bookkeeping Basics course officially launches! Let's connect! Business Minded Mama Facebook Community Instagram: @stephanieparenza